In Buckner v. Finley, 2 Pet. 586, in which it was held that bills of exchange drawn in one of the States on persons living in another were foreign bills, it was said by Mr. Justice Washington, delivering the unanimous opinion of this court: "For all national purposes embraced by the Federal Constitution, the States and the citizens thereof are one, united under the same sovereign authority, and governed by the same laws.Summary of this case from Hanley v. Donoghue
JANUARY TERM, 1829.
Bills of exchange drawn in one state of the union, on persons living in another state, partake of the character of foreign bills, and ought to be so treated in the courts of the United States. For all national purposes embraced by the federal constitution, the states and the citizens thereof are one, united under the same sovereign authority, and governed by the same laws. In all other respects, the states are necessarily foreign and independent of each other. 
The case was argued by Mr Hoffman, for the defendants, no counsel appearing for the plaintiff.
He contended, 1. That in all cases of promissory notes, inland bills of exchange, and other choses in action, an assignee, or an indorsee, is incompetent to sue the maker in the courts of the United States, except where such suit might have been there prosecuted, had there been no assignment or indorsement; and that as the payee of this bill of exchange, when calling on the makers, must have resorted to the state tribunals, the indorsee must be referred to the same tribunals.
2. That this being a bill of exchange drawn within this union, and payable there, viz. between citizens of sister states, cannot be regarded as a foreign bill, within the sound interpretation of the 11th section of the judiciary act of 1789; but that it is an inland bill, which, like promissory notes, remains forever subject to state jurisdiction, though transferred to citizens of another state.
3. That congress did not design, by the exception contained in that section, to legislate in reference to citizens of the different states of this union, or to confer on the circuit courts a jurisdiction in regard to them, so as to comprehend in their favour as " foreign bills," those that should be drawn between citizens of sister states.
4. That congress used this expression in its popular sense, which, indeed, is the only one in which that body could have thus legislated; and that bills foreign to the union, viz. bills drawn in or on countries alien to the sovereignty of the United States, were the only foreign bills that either the policy, or the obvious meaning of the exception embraces.
5. That foreign countries, and foreign bills, are correlative expressions; whereas, no sister state is foreign to the union, nor is any sister state truly foreign to any other state of the union. Congress, therefore, when legislating in reference to jurisdiction, must have had that union and foreign states in its view; and designed to legislate under this exception only in reference to bills drawn in or on the union, but in or on any country other than one of the states of this union; they being in regard to the union itself one, and not foreign; and also, in regard to each other, not foreign either in a popular or strictly legal sense.
6. That the exception in regard to foreign bills was, perhaps founded on the policy of extending to aliens, (who were most likely to become the holders of bills drawn here on foreign countries, or drawn in foreign countries on this) the benefit of the national tribunals; and was not designed to embrace citizens of different states, or to distinguish such bills from promissory notes, which remain with the state courts, though in the hands of citizens of different states. Such citizens, though bona fide indorsees, and for full value, being incompetent to sue makers in the federal courts, though they are competent to sue their own indorsers, because every indorsement is a new and independent contract, as between indorser and indorsee.
7. That the legal, no less than the popular understanding, has classed such bills under the head of inland; and that being the norma loquendi renders it highly probable that congress had no other bills in view, than such as are drawn in or on countries wholly foreign to the jurisdiction and sovereignty of this union.
8. That although most of the legislatures of the different states have allowed damages on the protest of bills drawn on sister states; yet nearly, without exception, the word "inland" has been applied to such bills, and the word "foreign" to those drawn in or on other countries.
For the popular and legal sense of the expression "inland bills," 4 Griffith's Law Register, 627. 699. 697. 799. 943. 1006. 1007. 1067. 1140.
9. The question is res nova in this Court, but has been the subject of judicial discussion in three instances, viz. in Millar vs. Hackley, 5 Johns. Rep. 375; and 1 S.C. Const. Rep. 100; and in Lonsdale vs. Brown, 1821, before Mr Justice Washington( a).
Mr Hoffman stated that he was not informed, whether in this last case the point turned on the question of jurisdiction, or only on the necessity of protest, as was the case in two other cases. The case in New York holds such bills to be inland. But had the decisions in the state courts been uniformly otherwise, it is difficult to conceive how the states are to be regarded as foreign to each other in the national tribunals. A bill may well be foreign in the state courts, and inland in the federal courts; and the constitutionality of the very exception contained in the 11th section of the judiciary act, if designed to embrace within its jurisdiction bills between state and state, seems to have been doubted by Mr Justice Story in 1 Mason, 251. But if this point be waived, the only inquiry is as to the probable intention of congress; which, the plaintiff contends, was to embrace only such bills as are drawn between countries actually foreign to each other. Chancellor Kent, in his Commentaries, Vol. III. p. 63, inclines to the opinion that bills between the states of the union are foreign in all courts; but the point of protest appears to have mainly occupied the mind of the learned writer; and the question of jurisdiction, arising from the sound construction of the act of congress, does not specially claim his attention.
THIS case came before the Court from the circuit court of the United States for the Maryland district. The action was instituted in the circuit court, on a bill of exchange, drawn on the 16th of March 1819, by the defendants, at Baltimore, on Stephen Dever at New Orleans, in favour of Rosewell L. Colt or order, of Baltimore, and by him indorsed, for value received, to the plaintiff, a citizen of New York.
A judgment was confessed by the defendants for $2,100, subject to the opinion of the court, upon a case stated; and which presented the question, whether the circuit court had jurisdiction in the case.
The defendants objected to the jurisdiction, on the ground that the bill was an inland, and not a foreign bill of exchange; and therefore, the defendants, and the drawee Rosewell L. Colt, being citizens of Maryland, although the bill was regularly in the hands of the plaintiff, as indorsee, who is a citizen of a different state, the circuit court had no cognizance of the claim.
The provision of the act of congress upon which the question arises, is in the 11th section of the "act to establish the judicial powers of the courts of the United States," passed September 24th, 1789. The words of the act are, "nor shall any district or circuit court have cognizance of any suit to recover the contents of any promissory note, or other chose in action, in favour of an assignee; unless a suit might have been prosecuted in such court, to recover the said contents, it no assignment had been made; except in cases of foreign bills of exchange."
The judges of the circuit court divided in opinion on the question of jurisdiction, and ordered the record to be certified to this Court.
This is an action of assumpsit founded on a bill of exchange drawn at Baltimore, in the state of Maryland, upon Stephen Dever at New Orleans, in favour of R.L. Colt, a citizen of Maryland, who indorsed the same to the plaintiff, a citizen of New York. The action was brought in the circuit court of the United States for the district of Maryland; and upon a case agreed, stating the above facts, the judges of that court were divided in opinion, whether they could entertain jurisdiction of the cause upon the ground insisted upon by the defendants' counsel, that the bill was to be considered as inland. The difficulty which occasioned the adjournment of the cause to this Court, is produced by the 11th section of the judiciary act of 1789, which declares, that no district or circuit court shall have "cognizance of any suit to recover the contents of any promissory note, or other chose in action in favour of an assignee, unless a suit might have been prosecuted in such court to recover the said contents, if no assignment had been made, exception cases of foreign bills of exchange."
The only question is, whether the bill on which the suit is founded, is to be considered a foreign bill of exchange?
It is to be regretted that so little aid in determining this question is to be obtained from decided cases, either in England, or in the United States.
Sir William Blackstone, in his commentaries, distinguishes foreign from inland bills, by defining the former as bills drawn by a merchant residing abroad upon his correspondent in England, or vice versa; and the latter as those drawn by one person on another, when both drawer and drawee reside within the same kingdom. Chitty, p. 16, and the other writers on bills of exchange are to the same effect; and all of them agree, that until the statutes of 8 and 9 W. III. ch. 17, and 3 and 4 Anne, ch. 9, which placed these two kinds of bills upon the same footing, and subjected inland bills to the same law and custom of merchants which governed foreign bills; the latter were much more regarded in the eye of the law than the former, as being thought of more public concern in the advancement of trade and commerce.
Vol. II. 467.
Applying this definition to the political character of the several states of this union in relation to each other, we are all clearly of opinion, that bills drawn in one of these states, upon persons living in any other of them, partake of the character of foreign bills, and ought so to be treated. For all national purposes embraced by the federal constitution, the states and the citizens thereof are one, united under the same sovereign authority, and governed by the same laws. In all other respects, the states are necessarily foreign to, and independent of each other. Their constitutions and forms of government being, although republican, altogether different, as are their laws and institutions. This sentiment was expressed, with great force, by the president of the court of appeals of Virginia, in the case of Warder vs. Arrell, 2 Wash. 298; where he states, that in cases of contracts, the laws of a foreign country, where the contract was made, must govern; and then adds as follows — "The same principle applies, though with no greater force, to the different states of America; for though they form a confederated government, yet the several states retain their individual sovereignties, and, with respect to their municipal regulations, are to each other foreign."
This character of the laws of one state in relation to the others, is strongly exemplified in the particular subject under consideration; which is governed, as to the necessity of protest and rate of damages, by different rules in the different states. In none of these laws however, so far as we can discover from Griffith's Law Register, to which we were referred by the counsel, except those of Virginia, are bills, drawn in one state upon another, designated as inland; although the damages allowed upon protested bills of that description, are generally, and with great propriety, lower than upon bills drawn upon a country foreign to the United States, since the disappointment and injury to the holder must always be greater in the latter, than in the former case. It is for the same reason, no doubt, that, by the laws of most of the states, bills drawn in and upon the same state, and protested, are either exempt from damages altogether, or the rate is lower upon them, than upon bills drawn on some other of the states.
The only case, which was cited at the bar, or which has come to our knowledge, to show that a bill drawn in one state upon a person in any other of the states, is an inland bill, is that of Miller vs. Hackley, 5 Johns. Rep. 375. Alluding to this case, in the third volume of his Commentaries, p. 63, in a note, Chancellor Kent remarks very truly, that the opinion was not given on the point on which the decision rested; and he adds, that it was rather the opinion of Mr Justice Van Ness than that of the court. It is not unlikely, besides, that that opinion was, in no small degree, influenced by what is said by Judge Tucker in a note to 2 Black. Com. 467; which was much relied upon by one of the counsel in the argument, where the author would appear to define an inland bill, as being one drawn by a person residing in one state on another within the United States. He is so understood by Chancellor Kent, in the passage which has been referred to: but this is undoubtedly by a mistake, as the note manifestly refers to the laws of Virginia; and by an act of that state, passed on the 28th of December 1795, it is expressly declared, that all bills of exchange drawn by any person residing in that state, on a person in the United States, shall be considered in all cases as inland bills. The case of Miller vs. Hackley, therefore, can hardly be considered as an authority for the position which it was intended to maintain. We think it cannot be so considered by the courts of New York, since the principle supposed to be decided in that case, would seem to be directly at variance with the uniform decisions of the same courts upon the subject of judgments rendered in the tribunals of the sister states. In the case of Hitchcock vs. Aicken, 1 Caines, 460, all the judges seem to have treated those judgments as foreign in the courts of New York; and the only point of difference between them grew out of the construction of the 1st section of the 4th article of the constitution of the United States, and the act of congress of the 26th of May 1790, ch. 38, respecting the effect of those judgments, and the credit to be given to them in the courts of the sister states.
It would seem from a note to the case of Bartlett vs. Knight, 1 Mass. Rep. 430, where a collection of state decisions on the same subject is given; that these judgments had generally, if not universally, been considered as foreign by the courts of many of the states. If this be so, it is difficult to understand upon what principle bills of exchange drawn in one state upon another state can be considered as inland; unless in a state where they are declared to be such by a statute of that state.
It has not been our good fortune to see the case of Duncan vs. Course, 1 South Carolina Constitutional Reports, 100; but the note above referred to in 3 Kent's Com. informs us, that it decides that bills of this description are to be considered in the light of foreign bills; and the learned commentator concludes, upon the whole, and principally upon the ground of the decision just quoted; that the weight of American authority is on that side.
That it is so, in respect to the necessity of protesting bills of that description, was not very strenuously controverted by the counsel for the defendant. But he insists, that under a just construction of the 11th section of the judiciary act, concerning the jurisdiction of the federal courts, these bills ought to be considered and treated as inland. The argument is, that the mischief intended to be remedied by the provisions in the latter part of that section, by the assignment is, promissory notes and other choses in action, is the same in relation to bills of exchange of the character under consideration.
We are of a different opinion. The policy which probably dictated this provision in the above section, was to prevent frauds upon the jurisdiction of those courts by pretended assignments of bonds, notes, and bills of exchange strictly inland; and as these evidences of debt generally concern the internal negotiations of the inhabitants of the same state, and would seldom find their way fairly into the hands of persons residing in another state; the prohibition as to them would impose a very trifling restriction, if any, upon the commercial intercourse of the different states with each other. It is quite otherwise as to bills drawn in one state upon another. They answer all the purposes of remittances, and of commercial facilities, equally with bills drawn upon other countries, or vice versa; and if a choice of jurisdictions be important to the credit of bills of the latter class, which it undoubtedly is, it must be equally so to that of the former.
Nor does the reason for restraining the transfer of other choses in action, apply to bills of exchange of this description; which, from their commercial character, might be expected to pass fairly into the hands of persons residing in the different states of the union. We conclude upon the whole, that in no point of view ought they to be considered other vise than as foreign bills.
This cause came on to be heard on the transcript of the record from the circuit court of the United States for the district of Maryland, and on the questions and points on which the judges of the said circuit court were opposed in opinion, and which were certified to this Court for its opinion, and was argued by counsel; on consideration whereof, it is the opinion of this Court that the bill of exchange on which this action is brought, ought to be considered as a foreign bill within the meaning of the 11th section of the judiciary act of the 24th of September 1787, and that the said circuit court has jurisdiction of this cause; whereupon it is considered, ordered and adjudged by this Court, that it be certified to the said circuit court for the district of Maryland, that the bill of exchange on which this action is brought, ought to be considered as a foreign bill, within the meaning of the 11th section of the judiciary act of the 24th of September 1787: and that that court has jurisdiction of the cause.
The opinion of Mr Justice WASHINGTON, in the case of Lonsdale vs. Brown, in which the same point was ruled in the circuit court of the United States for the eastern district of Pennsylvania, will be found in the appendix, No. II.